Trump says Apple will spend more money to manufacture products in the U.S.
Trump's dream of having Apple build the iPhone in the U.S. is getting closer to becoming reality.
On the heels of President Donald Trump's announcement calling for the imposition of a 50% tariff on India, the president is expected to announce that Apple will spend another $100 billion to build more products in the U.S. Since the tariffs are an import tax, Apple products produced domestically would escape them. Currently, the vast majority of iPhone units sold in the U.S. are assembled in India, according to Apple CEO Tim Cook.
Trump's doubling of India's tariff rate forces Apple to pivot away from previous plans
Trump is doubling the tariff rate from 25% to 50% on U.S. imports from India due to the country's purchase of Russian oil. Trump says that India's purchase of Russian oil is helping the latter finance its war with Ukraine. While Cook has said that most iPhones sold in the U.S. are made in India, other Apple devices sold in the U.S., such as iPads, Apple Watches, and MacBooks, are produced in Vietnam.
Apple CEO Tim Cook attended Trump's tech summit during the president's first term. | Image credit-Unknown
The president has long called for Apple to build more products in the U.S., including the iPhone. Even before getting sworn in for his first term, back in November 2016, then President-Elect Donald Trump told The New York Times that he would give Apple incentives to build a new U.S.-based factory that would turn out iPhone models. As recently as this past May, Trump said that he spoke with Cook and told him to stop building iPhones headed to the U.S. in India. Trump, instead, told Cook to build Apple's most important product in the United States.
Besides smacking India with one of the highest tariffs imposed on an individual country, the president will reportedly announce tariffs on all products containing semiconductors as soon as next week. This would put more pressure on Cook to somehow build new factories, put together a supply chain close to America, and find enough qualified workers who will take the low-paying assembly jobs associated with building Apple devices in other countries. Back in February, Apple announced plans to spend $500 billion over the next four years to expand its manufacturing in the U.S. The plan also will add 20,000 jobs in the U.S.
During his first term, Cook was able to convince Trump not to place tariffs on Apple products, including the iPhone, since it would allow South Korea-based Samsung to pick up U.S. sales at Apple's expense. But Cook has been unable to get Trump to back down this term. Back in May, Apple's chief executive made a comment that angered the president. Cook said during an earnings call that "the majority of iPhones sold in the US will have India as their country of origin."
Trump is not the first US president asking Apple to move iPhone manufacturing to the United States
Trump responded to Cook's comment in a Truth Social post that said the president had told Tim Cook that he expects the iPhone to be built in the U.S. "not India or anyplace else." At the time, the president talked about Apple paying a 25% tariff which is now dwarfed by the 50% tariff imposed on India.
"Today’s announcement with Apple is another win for our manufacturing industry that will simultaneously help reshore the production of critical components to protect America’s economic and national security."
-Taylor Rogers, White House spokesman
Donald Trump is not the first U.S. president to ask Apple to build the iPhone in the U.S. In 2011, then President Barack Obama asked the late Steve Jobs to build the device in the United States.
In a statement, White House spokesperson Taylor Rogers said, "President Trump's America First economic agenda has secured trillions of dollars in investments that support American jobs and bolster American businesses." Bloomberg analysts believe that Apple's U.S. footprint will be limited to high-end products, semiconductor engineering, and AI labs. They don't believe that Apple will build low-end phones and accessories in the U.S.
Investors have responded bullishly to Trump's comment with Apple shares up $12.01 (5.92%) on Wednesday afternoon to $214.93. It's the biggest gain for the shares in almost three months. Before Wall Street celebrates, it should be pointed out that in 2017 during Trump 1.0, the president announced that Apple would build "three big plants, beautiful plants" in the U.S. Trump said that he was told about the new facilities from Tim Cook himself. As it turned out, Apple denied that Cook ever told Trump about these plans since they didn't exist.
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